As an early advocate for blockchain, IBM has been working vigorously to commercialize the technology through its enterprise-grade version of Hyperledger Fabric, known as IBM Blockchain. Hyperledger Fabric currently empowers 1300 networks in the IBM blockchain cloud, 100 of which are live in production today.

Following years of experimentation and the advancement of established live networks, IBM has now established a set of 5 “blockchain for good principles,” demonstrating how trusted and transparent enterprise blockchains can benefit organizations and society as a whole.

The principles, which are also outlined in an IBM blog post, are:

Open is better

Permissioned doesn’t mean private

Governance is a team sport

Common standards are common sense

Privacy is paramount

It’s important to understand the power of technology. When IBM’s CEO, Ginni Rometty, began commenting on data rights with respect to data analytics, we became inspired on the blockchain side. Over the past 3 years, we have worked with many clients and have gained perspectives that have driven these principles. There are ways to use blockchain technology that are critical and would lead to good outcomes, but let's make sure we don’t leave that to guess work. That is how these 5 principles came about and it’s our responsibility to abide by them wisely and share them with others,” Jerry Cuomo, Vice President of IBM Blockchain and IBM Fellow, told me.

In order to better understand how each principle is being applied, Cuomo went into detail about the standards.

Open Is Better

According to IBM, blockchain networks must foster diverse communities of open source contributors to promote innovation and ensure the overall quality of code.

The open is better principle is carried across many aspects of what we do at IBM. Open is always better when it comes to the cloud, artificial intelligence or the Internet of Things, but it has especially interesting implications when looked at from a blockchain context. We have always been an ‘open by design’ company, but we think carrying that principle to blockchain is fundamental to our strategy,” explained Cuomo.

For example, IBM points out that The Hyperledger Project, operated under The Linux Foundation, is a “greenhouse” for growing enterprise-grade blockchain software with strong and diverse code contributors.

“Hyperledger is an open technology co-created by multiple institutions. The users of this technology benefit since collaborations create diversity,” said Cuomo.

Moreover, Hyperledger Fabric also allows IBM to monetize due to the collaborative nature of the technology.

Institutions like IBM working on Hyperledger Fabric are able to monetize due to the openness. For instance, Oracle has the Oracle Blockchain, but they monetize using Hyperledger Fabric. We are all collaborating to create these blockchain networks, but we all have competitive offerings. Without breaking the openness, we can add value to differentiate from our solutions. In turn, consumers get high quality code offered through multiple institutions. This is a unique business model built around the idea of open source,” noted Cuomo.

Permissioned Doesn’t Mean Private

Although anonymous public blockchains afford a number of powerful capabilities, IBM believes that these are not suitable for most enterprises, particularly those in regulated industries. Rather, to support an enterprise-grade platform aligned with regulatory and fiduciary responsibilities, enterprise blockchains must be designed around the principle of permissioned and trusted access. However, it’s important to understand that permissioned doesn’t mean private.

Blockchain is about trust. For instance, we trust businesses because of the rules they follow. But rules also have accountability, meaning you have to know which businesses are participating in certain systems. There are types of blockchains that are anonymous like Bitcoin and Ethereum, and there are types of blockchains like Hyperledger Fabric and several others that are permissioned. Permissioned is important because it insists that members of the network are known to the network. Permissions are balanced with privacy so blockchains that follow these principles have privacy capabilities that allow members to transact confidentially,” said Cuomo.

Maintaining a balance through a permissioned network is critical for IBM, as most organizations need to know whom they’re conducting business with to ensure that no illegal activity is being transacted over the network.

Governance Is A Team Sport

IBM also believes that enterprise blockchains must embrace distributed and transparent governance to ensure that networks serve the needs of all participants and are managed in a manner reflective of each use case.

“Governance means rules. These rules will define who the elected officials are, who is responsible for what roles and obligations, etc. Governance is mandatory in a blockchain network,” said Cuomo.

Moreover, IBM notes that a trusted governance model requires at least three designated trust anchors and that governance frameworks should also take into account a network’s funding model.

For example, the Verfied:Me identity network in Canada, convened by SecureKey Inc, has enlisted major Canadian banks to participate as trust anchors to host nodes and validate network transactions. SecureKey has created a governance model that involves ongoing checks and balances between its constituent working groups.

Common Standards Are Common Sense

Additionally, IBM understands that enterprise blockchains should be architected around common standards that are interoperable in order to help future-proof networks, prevent vendor lock-in and foster a robust ecosystem of innovators. This also involves interoperability of cloud platforms. And while most blockchain networks presently exist in siloes, the technology is evolving to support a network of networks.

According to IBM, the first step in promoting this interoperability is to make blockchains visible to one another through a registry, such as Hacera Unbounded. Moreover, blockchain networks should define and publish their data models and policies for change according to industry standards.

Privacy Is Paramount

Finally, IBM thinks that an enterprise blockchain should control who can access data and under what circumstances. Blockchain networks must also abide by privacy regulations such as GDPR. In most cases, that means any personal data should be kept off-chain.

For example,IBM Food Trust is a blockchain network aimed at ensuring food safety, freshness and sustainability. This network enables brands like Walmart, Albertsons and Driscoll to leverage shared data to enact various supply-chain efficiencies, while safeguarding each member’s proprietary information.

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